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Iron ore group Ferrexpo expressed its confidence in hitting production targets this year after output grew by nearly a tenth in the first quarter.

The company, which is based in Switzerland but operates mainly in Ukraine, also said that production costs declined sharply due to the steep devaluation of the local currency.

Pellet production from own ore was up 9.2% in the first three months of the year to 2.7m tonnes, compared with 2.5m tonnes in the first quarter of 2013.

Including third-party materials, output was 10.4% higher over the year at 2.8m tonnes, with 31% growth in high-grade 65% Fe pellets helping to offset a 4% fall in 62% Fe production.

"The company remains on track and budget to increase production during 2014 to its target run rate of 12m tonnes of pellets per annum and has made further good progress in [the first quarter] increasing the amount of ore processed and pellets produced," Ferrexpo said on Thursday.

Sales volumes were up 10.8% at 2.8m tonnes during the first quarter, while average cash costs per tonne dropped 21% to $50.3.

The drop in production costs "reflected improvements in efficiency and output as well as devaluation of the local currency in which around 50% of production costs are denominated", Ferrexpo added.

The company also said that the modernisation of production facilities is continuing as part of its programme of maintenance capital investments.

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